Netflix with Ads? How will that work – Microsoft and Netflix join together for new subscription plan

Loads of talk today about Netflix bringing Ads to the platform and we all know someone who complains about Foxtel having ads despite it costing money. So how will this Netflix deal work and what’s it all mean?

Netflix Chief Operating Officer Greg Peters today said “In April we announced that we will introduce a new lower priced ad-supported subscription plan for consumers, in addition to our existing ads-free basic, standard and premium plans. Today we are pleased to announce that we have selected Microsoft as our global advertising technology and sales partner. “

Mikhail Parakhin, President Web Experiences at Microsoft says “We’re thrilled to be named Netflix’s technology and sales partner to help power their first ad-supported subscription offering.

At launch, consumers will have more options to access Netflix’s award-winning content. Marketers looking to Microsoft for their advertising needs will have access to the Netflix audience and premium connected TV inventory. All ads served on Netflix will be exclusively available through the Microsoft platform. Today’s announcement also endorses Microsoft’s approach to privacy, which is built on protecting customers’ information.“

Basically, Netflix has chosen Microsoft to be the ones who create the technology that powers a highly personalised, customised and on-demand sales and ad platform. This is a huge boost for Microsoft in their online ad platform battle with the giant of the industry Google.

Netflix’s Peters saying “It’s very early days and we have much to work through. But our long term goal is clear. More choice for consumers and a premium, better-than-linear TV brand experience for advertisers. We’re excited to work with Microsoft as we bring this new service to life. “

Will I get Ads on my existing Netflix Subscription?

No. Think of this like Spotify – you can download Spotify and just listen to music. Every few songs there are ads. These ads pay for your music listening, but your account isn’t quite like a paid up Spotify account. You are a bit limited, can’t create the same level of playlists or skip through too many songs.

We’d expect Netflix to be similar, with ads supporting subscriptions that will be offered at a lower price.

Likely this will start in the USA but quickly expand globally.

What will Netflix with Ads cost?

The cheapest Netflix subscription today is $10.99, You’d expect the Ad supported Netflix to come in at $5.99 or $6.99 which is the price of Amazon Prime. However, that’s still a lot of money, so some would hope it might be even lower.

More likely though, the cynic in me thinks we might see it at the $6/7 price, and see the prices of current subscriptions go up.

When will ads start on Netflix?

“it’s early days” and “we have much work to do” means it’s not happening soon. Likely we’ll see some Beta testing this year before a wider roll-out in the new year.

Why is Netflix showing Ads?

Netflix is huge, making big coin of hundreds of millions of subscribers. Despite their size, and revenue, and profit – the suits on Wall St expect constant growth, so when they lose a chunk of subscribers after the pandemic lockdowns end and when cost of living prices force families to question every expense – the stock market freaks out. So to “grow subscribers” they need to find a lower cost plan, and the only way to do that is to offset the plan cost with Advertising revenue.

This could be a massive play. It could gain Netflix huge subscriber numbers, but also, Huge revenue.

Netflix knows you as well as Google does, so the deep level of personalised targeting possible through advertising on Netflix will drive a high ad price. Netflix may become one of the biggest commercial media operations in the world overnight.

Will ads on Netflix show before or during shows?

We don’t know anything yet, but there’s no doubt you’ll see pre-roll ads before your show starts.

Just as likely are ads within the program – something kids today won’t be able to understand or handle.

Can I skip ads on Netflix?

Best bet is to pay for a proper Netflix plan, then you avoid them all together.

But skippable ads like those on YouTube are likely, though not confirmed. Those ads put the onus on the creator and advertiser to make the ads compelling, and get the real bang for their buck.

Interesting times indeed!